Aug 04, 2022
Brazil Working With China to Export Soybean Meal to China
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
China recently opened its doors to corn imports from Brazil and the same is expected to happen for soybean meal imports from Brazil, according to the Brazilian Agricultural Minister, Marcos Montes. The details of soybean meal exports to China are expected to be finalized within two months. How soon meal could start to be exported after that will be determined by the market.
The opening of soybean meal exports to China was confirmed by the Brazilian Minister last week. The two countries had been working on an agreement for a while, so the announcement came as no surprise. Up until now, Brazil only exported soybeans to China, but Brazil had been pushing for an agreement to export the higher value soybean meal.
The Brazilian and Chinese governments are in the process of determining which soybean crushers will be authorized to export soybean meal. Initially, the Chinese authorities will establish requirements to determine which crushers could be authorized to export soybean meal and then the Brazilian Minister of Agriculture will send technicians to inspect the crush facilities to determine if they meet the requirements. Within two months, they expect to pass on a list to the Chinese of the facilities eligible for exports.
When soybean meal exports will start will be determined by the market. When soybeans are more expensive than meal, China will buy meal and the Chinese demand will determine the volume of meal exports.
The Brazilian Association of Vegetable Oil Industries (Abiove) indicated that soybean meal exports will not come at the expense of domestic meal consumption or current soybean meal exports. The meal that will be exported to China will be over and above what is currently consumed domestically or exported.
The Brazilian crushing capacity is currently being underutilized. Crushers had expanded their capacity in expectation of increased soybean oil being utilized in biodiesel, but that has not developed as expected. The amount of soybean oil blended into biodiesel has declined in the last two years due to the Covid pandemic and high diesel prices.
In 2022, Brazil is expected to crush 48 million tons of soybeans, but the industry has the capacity to crush 55 million tons. If the crush is increased from 48 to 55 million tons, there would be an additional 4 million tons of meal that could be available for export.